Determinants of Acceptance of Islamic Banking Products and Services

Question: Discuss about the Determinants of Acceptance of Islamic Banking Products and Services among students at the International University of Malay -Wales. Answer: Theoretical Framework The current segment elucidates in detail the framework or the structure that can help in supporting the theory of this research study under consideration. Therefore, this theoretical framework formally introduces and explicitly illustrates the theory that explains the reason why the specific research problem under consideration exists (Seyed-Javadin et al., 2014). The present study shows that the concern is essentially determination of the primary factors that lead to the acceptance of Islamic banking products as well as services among the students in at the International University of Malaya, Wales. Awareness, comprehension and perception of individuals towards the Islamic banking products in Malaysia can help in building the attitude and image of the individuals towards Islamic banking. In addition to this, availability of different products as well as services together with religious obligation can be considered to be important factors that can be considered to be factors/determinants of acceptance of the said product. Founded on the review of the academic literature, it can be said that majority of individuals in Malaysia are not conscious of Islamic banking. Even they are conscious of Islamic banking they exactly do not in fact understand the overall operations of Islamic banks (Lujja et al., 2016). However, comprehensible understanding o f consumer awareness, understanding and perceptions can assist the Islamic financial institutions to generate apt marketing stratagems to assume a greater share of the financial market. In essence, this is because awareness, understanding as well as perceptions are necessarily the foundation of utilization of Islamic banking products as well as services. Again, if people are not conscious and do not understand properly about different Islamic banking products and they would not adopt initiative to adopt specific Islamic banking products. Therefore, in a bid to attract more number of people to accept different products of Islamic banking, it is feasible to go back to mainly the roots of the trouble that can help in determination of factors that direct people to utilize Islamic banking products as well as services. Lujja et al., (2016) asserts that Islamic banks have to be make certain that their clients can understand their principles of operation otherwise the clients might have pos t-purchase difference of opinion. In this study, it is imperative to understand the characteristics of Islamic banking that is generally referred to as the interest free banking else wise risk sharing banking. Islamic banking has developed and grown to different parts of the world and therefore is not limited to only the nations with majority of Muslim populations. Therefore, religious obligation is a very important factor that needs to be examined as an influencing factor behind acceptance of Islamic banking products. Researchers have explored significant variances in opinion among different races towards Islamic banking. Again, prior studies reveal that Islamic banking products have certain differences from the conventional ones as per the Shariah principle (Jinjiri Ringim, 2014). Therefore, consciousness as regards the varied products made available by these banks might also be considered as important factor behind acceptance of students in Malaysia. In addition to this, prior studies also reflect different factor s that help in developing the image as well as perception of individuals towards Islamic banking. It can hereby said that image as well as perception of Islamic banking in Malaysia can be referred to as the condensed view that these banks mirror founded on the Islamic Shariah regulations. Validity Test The internal validity of the survey is tested with the help of Cronbachs alpha. Cronbach alpha is one of the most commonly test used to test the internal consistency of the variables (Field, 2013). The value of Cronbachs Alpha value should be equal to or more than 0.7 to maintain the internal consistency (reliability) of the variables. In order to analyze the survey response all the 175 responses of 16 questions were tested with Cronbachs alpha. The overall Cronbachs Alpha has a value of 0.959, signifying a high amount of internal consistency of the variables (table 1). Table 1: Reliability Statistics Cronbach's Alpha N of Items .959 16 Table 2: Item-Total Statistics Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted I have sound k2wledge on what constitutes riba. 56.5543 130.088 .636 .959 I have firm belief that the Islamic banking products and services available in the market are free from elements prohibited by Shariah. 56.4686 129.722 .747 .957 A 1 should avoid conventional financial system and products which are Shariah 2n-compliant. 56.4800 129.010 .711 .958 A 1 should support the Shariah-based financial system and products. 56.3029 131.661 .705 .957 Islamic banks staff in Malaysia are always ready and willing to provide prompt and effective services to customers. 56.4057 129.231 .827 .955 Islamic banks in Malaysia provide good range of savings, investment, financing, card and wealthmanagement products to customers. 56.3257 130.198 .823 .956 Islamic banks in Malaysia ensure convenience to customers by providing sufficient physical facilities such as branches, parking lots etc. 56.4114 129.646 .805 .956 Islamic banks in Malaysia ensure convenience to customers by providing sufficient internet banking-related facilities. 56.3600 130.956 .778 .956 Islamic banks in Malaysia generally provide customers with true and accurate information. 56.4114 130.140 .798 .956 Islamic banks in Malaysia have had strong financial performance in recent years. 56.4171 131.796 .747 .957 Islamic banks in Malaysia are well advertised in the media. 56.5086 132.148 .605 .960 I believe that the Islamic banks in Malaysia have secure systems in place to protect customers confidentiality and privacy. 56.4057 129.116 .839 .955 I am keen towards the Islamic banks savings and investment products such as current, savings and Mudharabah Investment accounts. 56.3371 130.662 .759 .957 I am keen towards the Islamic banks financing products such as home, vehicle and personal financings. 56.3829 128.962 .807 .956 I am keen towards the Islamic banks card products such as debit, credit and charge cards. 56.3829 129.491 .787 .956 I am keen towards the Islamic banks wealthmanagement products such as bancatakaful, estate planning and ar-Rahnu. 56.4171 129.130 .780 .956 Table 2 presents the item total statistics for the 16 variables. The last column of the table shows the value of Cronbachs alpha when the item (variable) has been deleted. From the values it is seen that the value for the variable Islamic banks in Malaysia are well advertised in the media is 0.960. This means that the response to the variable is not reliable. Hence the variable should be deleted to maintain the internal consistency of the responses. The response to all the variables for item total statistics to be less than or equal to 0.959. Thus, there is a high amount of internal consistency amongst the other 15 variables. References Field, A. (2013). Discovering statistics using IBM SPSS statistics (1st ed.). SAGE. Jinjiri Ringim, K. (2014). Perception of Nigerian Muslim account holders in conventional banks toward Islamic banking products.International Journal of Islamic and Middle Eastern Finance and Management,7(3), 288-305. Lujja, S., Lujja, S., Omar Mohammad, M., Omar Mohammad, M., Hassan, R., Hassan, R. (2016). Modelling public behavioral intention to adopt Islamic banking in Uganda: the theory of reasoned action.International Journal of Islamic and Middle Eastern Finance and Management,9(4), 583-600. Seyed-Javadin, S. R., Raei, R., Iravani, M. J., Safari, M. (2014). Presenting a conceptual model to explain the role of strategic management and planning in Islamic banking competitiveness.International Letters of Social and Humanistic Sciences,26, 46-56.